First let’s start with what Calibrated Capitalism is not
In the past few years, but especially so after 2008, I have tried to observe society and our economic system as well as I could, and that includes the interaction between the two.
It is a blessing to grow up in a Western European country with market infrastructure, where talent is channeled into effective production, let us not forget.
At the same time, several systemic changes have taken place, some of which are less than democratic and certainly less than meritocratic.
The total cost of the winddown of the Global Financial Crisis is very hard to calculate, precisely because we do not know when that winddown has officially ended, and what the exact side effects are both in an economic and human sense. From a perspective of logic and human reciprocity, several changes make little sense:
- Public debt since 2008 has skyrocketed in EU countries from a ‘meagre’ average of 65% of GDP towards 87% in 2014, back to 78% in 2019 and up to 90% in 2020 during COVID (https://ec.europa.eu/eurostat/cache/digpub/european_economy/bloc-4c.html?lang=en)
- Measurements regarding public debt have changed, which can be proven for example on the basis of Eurostat’s own documentation; Hence, due to contingent liabilities, estimates of public debt can be highly skewed
- Several whistleblowers who have evidence of systemic risks and outright fraud have fled their country (in the democratic union the EU that is!), and reports on high-level corruption have often been met with silence and even resulted in assassination on several occasions; The implication is that those who defend the concept of rule of law are often at risk in our current economic and social climate
(https://theshiftnews.com/2020/08/06/two-countries-two-murders-that-deserve-answers/)
- Communication surrounding Quantitative Easing, i.e the purchase of financial securities by central banks, often at negative interest rates, has been very limited nor very transparent; Even though there are official announcements with regard to price stability, very little attention is paid to underlying economic fundamentals (https://www.ecb.europa.eu/press/key/date/2023/html/ecb.sp230302~41273ad467.en.html)
- The Banking Union still has not been completed (https://www.bruegel.org/newsletter/can-europes-banking-union-ever-be-completed)
- The average cabinet duration of the past three cabinets in the Netherlands has been on the decline, often due to cabinet crisis situations. These are often the result of difficulties in problem-solving with regard to existing dossiers (https://www.parlement.com/id/vhnnmt7j3lxn/zittingsduur_kabinetten#)
Those are just six examples of persisting imbalances in today’s post-2008 capitalism (in Europe). In other words, it is not very calibrated, and lots of economic problems have remained unsolved. Yet, there is reason for optimism too.
What Calibrated Capitalism can and should strive for
- Sound and transparent public debt management
- Strong rule of law based on healthy interactions between institutions of shared values
- A better record on whistleblower and journalist protections in any case, and especially for those who shed light on large scale crimes and economic risks; They emphasise interaction between human rights and market performance at its best
- Good information provision for investors, based on both official documentation as well as in-depth investigations
- Durable balance between capital and labour
- Reduce tensions in society, a shared objective reality is vital for natural sciences and also for economics and reduces the chance of populism and extremism
- Follow an organic growth path that tunes in with cultural, economic and scientific history of the underlying civilisation in which in operates
These seven points are not only self-evident in terms of relevance, they could help Europe (or any place for that matter) stay competitive in the long run, and form a guard-rail against totalitarianism. Other people have stressed the importance of one or several of these points before me, yet execution remains difficult.
Incorporating these aspects can make the Euro more valuable in a nominal sense but also in a real sense, reflecting human rights and a free society, and that is (not unlikely) where our real competitive edge lies.
The main idea behind calibrated capitalism is that markets and society are not just productive and free, but also ready to acknowledge externalities while openly cherishing and incorporating feedback by those who address them. Even better, the market can turn these externalities into more productive pursuits, which makes a system more compatible with the laws of nature (natural law), meaning that it is sustainable in the long run when its first principles are taken to their logical conclusion.
Why the emphasis on whistleblowers?
Regulatory complexity is still on the increase. Meanwhile, whistleblowers are those who address violations from the bottom up and are in a rather bad position. Taking them seriously improves human rights but can also lead to less need for regulation. They enforce the law bottom up where every other procedure has failed.
What if capitalism is not calibrated?
The last few years, and especially those years after 2008 have shown a steady decline in economic performance, trust in public institutions, excessive and hidden debt, inflation, and corruption risks by foreign regimes. If these are not addressed in time, our free societies can quickly spiral into oligarchies where no shared reality exists, and where cost-benefit analyses and other economic analyses are mere sheets of paper. The end-result of such a scenario is worth avoiding.
What’s the plan of this page and how does it relate Calibrated Capitalism to ‘Discounted … By a Lightning Strike!’?
Having written a financial thriller about the most adverse scenario European societies can take, this page offers an exciting chance to cover every kind of economic topic and uncover as many sources of information as possible. This can be anything ranging from the sale of tulips in the 17th century to the tokenisation of books, the risks of too-big-to-fail guarantees, and anything in between. Of central importance will be the role of European history, because that is, to a large extent, what calibrates us.
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